Erly Forced to Abandon Plan to Go Private

Erly Industries, a Los Angeles food company, has abandoned plans to go private after failing to reach an agreement with some of its debt holders.

The company, formerly known as Early California Industries, sold its large olive business last September to a United Biscuits subsidiary for about $84 million as part of a two-step plan to buy out its public shareholders.

However, Erly Controller Tom Whitlock said Tuesday that Erly’s subordinated debt holders objected to the company’s liquidation plan. Under that plan, Erly would have repurchased its shares for $15 apiece and assumed its entire $18.4-million subordinated debt.

The debt holders “felt they should have been repaid too, and apparently, they prevailed,” Whitlock said.

Whitlock said Erly executives didn’t regret the sale of the profitable olive business, the nation’s largest. “We always knew there was a possibility the subordinated debt (holders) could hang it up,” he said.

Erly also announced a plan to buy back some of its stock to boost its value. The company’s stock, which closed at $8.75 in over-the-counter trading Tuesday, has a book value of $16 a share, Whitlock said.

Whitlock said losses in Erly’s main businesses--two Sierra Wine wineries in the San Joaquin Valley and its Houston-based Comet Rice operations--have depressed its stock price.